July 22, 2010

Washington State Highest Court Rules Statutes of Limitations Do NOT Apply to Arbitration

By Jill Gross

In a closely-watched case, the Supreme Court of the State of Washington held today that statutes of limitation do not apply in arbitration.   Broom v. Morgan Stanley DW, Inc., No. 82311-1 (Sup. Ct. Wa. July 22, 2010).  In that case, an NASD arbitration panel dismissed investors’ garden-variety suitability claims against their brokers on state statute of limitations grounds.  The investors moved to vacate the award, and the case ended up in the highest court.  The Court first reaffirmed that “facial legal error” is one instance in which arbitrators exceed their powers and thus is a valid ground for vacatur of an arbitration award under its state arbitration statute.  Next, the Court concluded that, as a matter of statutory interpretation, Washington’s statutes of limitation clearly applied only to “actions,” and arbitrations were not “actions” as contemplated by the state legislature.  Thus, the Court vacated the arbitration award, permitting the investors to have their claims heard on the merits in a new arbitration.

(H.T. to Ed Pekarek for alerting me to this decision!)

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Comments

  • Kevin Sullivan says:

    Thanks for pointing out our Broom case here, it sure vindicates my views. My clients are very happy. Even before this, the date on which SOL starts was almost always an issue of fact. I tried securities cases in court in the 1980′s and we would never have got such an absurd decision as we got from our 1st Panel. We will now go back and try the matter to the new Panel.

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